Housing Market Terms
15 terms
Housing market conditions determine whether homeownership builds wealth or traps families in unaffordable obligations. When prices rise faster than incomes, when inventory dries up, or when interest rates spike, the gap between what families earn and what housing costs widens — creating the conditions that the American Distress Index tracks as Cost Pressure.
The terms in this cluster cover how housing markets are measured and what the numbers mean for household financial distress. Affordability ratios, price indices, inventory levels, and foreclosure rates are all connected through the same economic forces that drive the ADI composite score.
Housing Market Health Indicators
| Indicator | Healthy Market | Distressed Market |
|---|---|---|
| Months of inventory | 4-6 months (balanced) | <2 months (bidding wars) or >8 months (price drops) |
| Price-to-income ratio | 3-4x median household income | >5x in many metro areas |
| Housing cost burden | <30% of income on housing | >30% (cost-burdened), >50% (severely) |
| Foreclosure rate | <1% of mortgages | >3% (crisis territory) |
See Housing Affordability Statistics for current data, or browse Foreclosure Statistics 2026 for the latest filing numbers.